Determining Overtime Pay Rate

The U.S. Department of Labor defines overtime as hours worked over 40 in the course of a standard workweek. For employees who aren't exempt from U.S. labor laws, those overtime hours should be compensated at time-and-a-half, aka 1.5 times an employee’s regular rate of hourly pay.

Workers that are paid an hourly rate can calculate their overtime pay rate very simply: multiply your normal hourly wage by 1.5. That is the amount you should be paid for any overtime you work.

Calculating overtime pay rates for salaried employees takes a few more steps, but is simple nevertheless:

Divide that number by 40, the maximum number of non-overtime hours in a workweek. This is your gross hourly rate.

Multiply your hourly rate by 1.5. This final number is your rate of overtime pay, before taxes.

If salaried employees want a better idea of the net earnings (after taxes) they’ll make for overtime pay, they can divide a normal paycheck by the maximum straight hours during that pay period. In other words, if you get paid every two weeks, divide it by 80 (two 40-hour weeks). Then, multiply that number by 1.5.